What are pay periods?
Pay periods refer to the regular intervals at which employees receive their paycheques.
For salaried employees, the most common pay periods are bi-weekly (every two weeks) or monthly. Salaried employees receive a fixed amount of pay for each pay period, regardless of the actual hours worked during that period.
How many pay periods are there in a year?
It depends on the pay period frequency, the payroll processing date, and the calendar year.
Leap years can impact the number of pay periods in a year for companies that use a weekly or bi-weekly pay schedule. It will not impact any other pay frequencies. Sometimes, weekly frequencies may have an extra pay period occur even during a non-leap year, because in some calendar years there are days of the week that occur 53 times rather than 52.
In a non-leap year, there are 52 weeks, and if a company pays employees every two weeks, there would be 26 pay periods in the year (52 weeks divided by 2). However, in a leap year, there is an extra day (February 29th), which means there are 366 days instead of the usual 365.
This extra day can result in an additional pay period, especially for companies that process payroll on a specific day of the week. For example, if a company pays its employees every other Friday and a leap year begins on a Friday, there would be 27 pay periods instead of the usual 26.
It's important to note that while the number of pay periods may change in a leap year, the total annual salary for a salaried employee remains the same. This will result in the employee receiving a slightly reduced pay amount each pay period, but they will receive the same amount annually. If the employer wants to continue paying their employees the same amount each pay period during these exception years (effectively providing them with an "extra" paycheque for the year), then they must adjust the person's annual salary amount within their profile for the year, and then change it back before the next year when the regular number of pay periods occur again.
FAQs: Pay periods
- The CRA calculates taxes based on pay dates, not cycle dates, and the number of pay periods depends on which day of the week you pay employees. As explained above, any pay group with a bi-weekly frequency will end up having 27 pay periods roughly every 11 years. Any pay date that fell on Jan 1 or Jan 2 (Monday or Tuesday) and pay bi-weekly, will have 27 Pay Dates this year in 2024.
If you require further information, please contact the National Payroll Institution or CRA.